An investor bought 100 shares of stock at a cost of $10 per share. He held the stock for 15 years and wants to sell it now. For the first three years, he received no dividends. For each of the next seven years, he received total dividends of $100 per year. For each of the remaining five years, no dividends were paid. In the last 15 years, the investor's marginal tax rate and capital gain tax rate were averaging about 30% and 20%, respectively. What would be the break-even selling price to earn a 15% return on an investment after tax?(a) $6,579 (b) $7,977 (c) $8,224 (d) $9,398
An investor bought 100 shares of stock at a cost of $10 per share. He held the stock for 15 years and wants to sell it now. For the first three years, he received no dividends. For each of the next seven years, he received total dividends of $100 per year. For each of the remaining five years, no dividends were paid. In the last 15 years, the investor's marginal tax rate and capital gain tax rate were averaging about 30% and 20%, respectively. What would be the break-even selling price to earn a 15% return on an investment after tax?(a) $6,579 (b) $7,977 (c) $8,224 (d) $9,398
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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An investor bought 100 shares of stock at a cost of $10 per share. He held the stock for 15 years and wants to sell it now. For the first three years, he received no dividends. For each of the next seven years, he received total dividends of $100 per year. For each of the remaining five years, no dividends were paid. In the last 15 years, the investor's marginal
(a) $6,579 (b) $7,977 (c) $8,224 (d) $9,398
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